One of the most frightening things a journalist learns on arrival in the US capital is how little so...
One of the most frightening things a journalist learns on arrival in the US capital is how little some of the elected officials know about economics and markets. It doesn't seem to be asking too much for politicians to understand the basics of supply and demand. They are, after all, the people entrusted with tax dollars.
After a while, one becomes hardened to 'econlexia'. Yet, every now and then a lawmaker steps to the microphone with a clueless question that brings it all back. Congresswoman Carolyn Maloney did just that last week, as she grilled Federal Reserve chairman Alan Greenspan on his recent interest rate policies.
The New York Democrat, reading from a script, asked Greenspan if the recent rapid growth in the broadest measures of money would inhibit the Fed from cutting rates further. One could almost hear a collective "What?" from everyone in the hearing room as Maloney showed herself to be the only person involved in the US economy who still thought the Fed cared about money supply.
Greenspan would've been excused for rolling his eyes or laughing at the question. But he held his cool and, in case Maloney hadn't heard him the hundred or so other times he made the point in public, reiterated that the Fed didn't find monetary trends a useful guide to interest rate policy.
To be fair, Maloney was just doing her job. We in the media are under no illusions that Greenspan's appearances on Capitol Hill are about anything other than politics. Sure lawmakers care about the economy and interest rates. Mostly, though, it's about getting the Fed chairman to support your ideas or putting him in the hot seat for a certain problem, regardless of whether monetary policy has any bearing on it. Then, you can go back to your home district and say "Boy, I sure gave that Greenspan guy a piece of my mind," or "When I recently posed that question to the Fed chairman, he assured me..." Politicians will be politicians.
There are many in Congress who ask thoughtful, probing questions, such as Representative Barney Frank. The Massachusetts Democrat may not be a favourite on Wall Street, but his questions are a godsend to reporters and investors dying to know something about the Fed's next rate move. Yet that doesn't ease the frustration of those watching Greenspan testify.
Why is it that those with access to Greenspan always seem to ask the wrong questions? Here you have the full attention of arguably the most powerful man in the US and global economies, and you ask him about the 2000 Census or generational scoring or whether banks should be involved in the real estate brokerage business?
The economy may be in recession, and lawmakers press the Fed chairman on how interest should be paid on business checking accounts. And then, of course, there's the tendency to ask the same question 22 different times. For Republicans, it's some variation of "Aren't tax cuts better for the economy than debt reduction?"
Democrats ask over and over again "Isn't it better to eliminate the debt first and cut taxes later?'' It all comes down to access. Greenspan doesn't give press conferences like his counterparts in Japan and Europe, leaving journalists with little or no access to the man. Those of us who are blessed with a meeting here or there can't write about what the Fed chairman says anyway, and few Wall Street economists get to meet one-on-one with the world's most powerful central banker.
So, reporters and analysts alike rely on politicians to probe Greenspan's mind on our behalf. Hence the collective sense of bafflement each time that opportunity is squandered so a member of Congress can score a point or two with voters.
It's doubtful the Fed chairman would ever submit to press briefings. The complexities of monetary policy don't lend themselves to sound bites and pat answers, in the Fed's thinking. But why not invite Greenspan up to Capitol Hill for periodic questioning by a panel of private-sector economists? If that's too much to ask, how about an online chat with the Fed chairman?
It's hard to picture Greenspan, who turned 75 on 6 March, hunched over a computer keyboard opening his mind to a curious public. But asking the right questions makes all the difference. Politicians will be politicians. But wouldn't it be nice to learn something new from Greenspan for a change? Without the right questioners, one can't help but doubt that we ever will.
William Pesek Jr in Bloomberg Washington newsroom
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